The UK’s housing market is currently characterised by buyers gaining significant negotiation power, as reflected in the latest House Price Index from Zoopla.
The confluence of rising mortgage rates and an increased number of homes for sale has led to an environment where buyers are commonly securing discounts.
On average, homes are selling for 5.5% less than the asking price, translating to a typical reduction of £18,000, marking the largest gap in over five years.
In specific areas like London and the South East, this trend is even more pronounced with discounts reaching 6.1% or around £25,000, compared to a 4.8% reduction, or approximately £11,000, in other regions of the UK.
This shift towards a buyers’ market is further evidenced by a 34% year-on-year increase in the number of homes for sale, reaching a six-year high. Despite this, house price inflation in the UK has fallen to -1.2%, a stark contrast from the 8.2% seen a year ago.
Despite a 13% dip in buyer demand compared to 2019 levels, the volume of new sales has risen by 15% from last year and is 5% higher than 2019. This suggests a growing realism among sellers about current market values and an anticipation that mortgage rates may peak and potentially decline in 2024.
Richard Donnell, executive director at Zoopla, said: “These are the best conditions for home buyers for some years with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale. There is a growing acceptance that what a home might have been worth a year ago is now largely academic given current market conditions. Sellers have plenty of room to negotiate with average house prices still £41,350 higher than the start of the pandemic.
“It’s a positive sign that new sales continue to be agreed at a faster rate than a year ago and pre-pandemic. This indicates that house prices do not need to post bigger falls to get people moving but sellers need to be ready for more negotiation on price. New sales will slow as we run up to Christmas and some sellers will take homes off the market ready to relaunch in the new year.“
Guy Gittins, chief executive officer of Foxtons, added: “London is consistently the highest value UK property market, so it is less susceptible to the market fluctuations seen elsewhere in the UK. This means London’s homeowners are well-positioned to capitalise on the upcoming bump we see annually from Boxing Day and into the new year.
“In contrast to the rest of the country, London has not experienced a sweeping decline in house prices, however, the market does experience a higher volume of price adjustments. A good agent understands where the market is trading and has the data to find the best price that will still stimulate activity. Going into the new year sales surge, selecting the right agent that utilises the market information well will be critical to homeowner’s achieving their property goals.”
Reaction
Nathan Emerson, CEO of Propertymark:
“We continue to witness an uncertain housing market in many regions with people remaining cautious on their approach.
“It is however reassuring to see inflation dipping back down and interest rates currently being held steady, although we must bear in mind that Andrew Bailey, Bank of England Governor, has hinted there will be no quick drops in base rate for the foreseeable future in order to keep inflation in check. It’s important to remain realistic and allow the dust to fully settle before confidently feeling all is robust again.
“It is encouraging to see Zoopla report sales volumes starting to climb, likewise it’s also extremely positive to see a jump in the number of homes now on the market when compared year on year.
“Propertymark remain optimistic the entire UK housing market will steadily gain momentum – especially when we start to see firm growth in household incomes once again and of course further anticipated drops regarding inflation.”
